It looks like the era of low growth is making outperforming the index even tougher. This is leading to a shift in flows to passive funds. But all is not lost in the world of active management..
Now that active fund managers have lost the debate against their passive rivals, they are finally finding their voice. The US public continues to vote decisively against traditional fund management, which attempts to manage equities actively, and beat broad benchmarks, in return for a fee. In the 12 months to the end of January, according to Morningstar, some $245bn flowed out of active funds while $408bn flowed into passive funds, which merely seek to match the returns of a benchmark and to minimise their fees. Once a niche category, passive funds now account for 32.5 per cent of US assets managed in mutual and exchange traded funds.